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Summary
In this episode of the Org Design Podcast, host Amy Springer engages in a thought-provoking conversation with Pallavi Srivastava, an associate partner at The OrgSmith. They explore the often misunderstood concept of organizational design, emphasizing its importance beyond mere restructuring and cost-cutting measures. Pallavi shares insights on the need for leaders to adopt an agile and entrepreneurial mindset in today's rapidly changing business environment, particularly in light of recent global disruptions like COVID-19.
The discussion covers the critical role of leaders in aligning organizational structures with dynamic strategies and the necessity for constant communication about these strategies. Pallavi highlights the significance of fostering a culture of innovation and psychological safety, enabling organizations to adapt quickly to change. She provides real-world examples of companies that successfully pivoted during the pandemic, demonstrating the qualities that empower resilient and agile organizations. Listeners will gain valuable perspectives on the evolving landscape of job design in the context of AI and digital transformation, and the essential leadership skills required to navigate these changes.
Pallavi underscores the need for empathy in leadership while also advocating for the courage to make tough decisions as organizations adapt to new challenges. Join us for this enlightening episode as we uncover the complexities of organizational design and the pivotal role of leadership in fostering a responsive and resilient business environment.
Show Notes
OrgSmith - https://www.theorgsmith.com/
Transcript
Amy Springer: [00:00:00] People inside of organizations don't necessarily know that org design is a concept that exists. When we've been talking to our possible customers at Functionly, there's often not a clear path to how they found us, as a tool. Everyone has a different starting point and everyone has a different question they're solving.
That's why I'd love to understand your story, because often it is something that evolves over time. Most people we talk to say, "I started over here and then I kept asking these questions, and then suddenly I've discovered that this world of org design existed. I'd love to know, what were the experiences you had and the questions that you were asking, that led you into the space you're now working in?
Pallavi Srivastava: There's a lot of myths around org design, itself. I think people mistakenly assume org design is primarily org restructuring. And they look for org design aspects when they are looking to cut costs. Firstly, org design is not something people [00:01:00] immediately think of because it's not something that you do every day.
It's a transformational event for an organization. And there's so many elements that come together that you cannot be doing it everyday or, very often. So, usually there is some trigger— business trigger— that makes leaders think about org design. But it is, in my view, quite misunderstood to be very narrow in its scope of only looking at, "How can we cut layers in the structure, and then how can we optimize in costs."
Rarely, do we think about org design from the point of view of, "Is the culture right? And are the HR levers right? Is the talent and the skills, right? So, it does have so many elements into it that, it's actually the full gamut of everything that we do in HR. Including everything that business does, say in finance. But to correlate it, is where I think leaders don't really think very broad.
They think very narrow. Cost and layers. And I [00:02:00] think that's probably a myth that needs to be busted a bit
Amy Springer: You mentioned about what leaders could be doing every day. Let's forget the big transformational project. What would you love to see leaders doing every day, to ask the right questions ?
Pallavi Srivastava: If you really look at the core of org design, is to make sure that it aligns with the org strategy. And the org strategy, obviously, is not a static thing. It is dynamic in the sense it is very environmentally-market-driven and it changes very often.
So, I think there is need for agility in the way the leaders think about their organization structures and the flexibility that they need to have in their operating models to quickly rejig.
And to make sure that, therefore it aligns with the strategy, which changes fairly often now, as compared to before. Traditional organizations would typically have a long term strategy, which is like a five-year-old plan. And then you had minor strategy plans, which had one year [00:03:00] outlook. But today, things are, much more fluid. Technology changes in literally six months and even lesser now.
And then we are trying to think in the world of gen AI and chat GPTs, and also all the regulatory economic environment that we have today. Not to mention, the wars going on and the supply chain disruption that these CEOs and leaders need to be very multifaceted in how they think about their org structure. And need to be, therefore, very agile in being able to quickly come together to redefine structures and requirements of that.
Part of the thing that I would really like leaders to do, is to build that entrepreneurial mindset within themselves, which is how quickly can they read the environment that they have. And that's a skill that's not necessarily there with every leader.
So, their ability to read the market, basically sense and anticipate. And that's a skill they need to also transfer to their leadership team. And the second, which I really see as critical [00:04:00] is, a constant drum beat about the direction. What's the north star? The strategy? So, communicating the strategy a lot more with clarity. And not just one time in the year, when you kick off the year, you do a strategy session with your leaders and you forget after that. So, I would like to see the leaders be much more on ground, hands-on with communicating strategy. Because that does keep changing. Even if it doesn't change fully, there are nuances that changes in it, so they need to do that more often.
Amy Springer: You mentioned in the last couple of questions about leaders tend to being stuck in their own space and not thinking that bigger picture. But, you've also mentioned about how our current environment between chat GPT, and the global conditions around supply chains, and just how quickly strategy is changing.
Your previous work experience is both within companies, but also in consulting. Do you have some examples you can give me of what that looked like, [00:05:00] somewhere you've worked previously. What might a leader, that's listening to our podcast, be looking out for that they go, "Ooh, actually, maybe that's something I need to work on myself."
Pallavi Srivastava: I think the nearest example that I have is from my previous company, where I did spend a good number of years, which is at IBM. And if I think about the time when COVID happened, the world was quite disrupted. We started to see so many of our clients, and so many companies across the world, very quickly change their product offerings.
My own company, IBM, had a partnership with this weather channel. They started to map a lot of data across the world to see where the COVID is spreading, using, our own expertise in AI to predict how the spread is going to happen and where it is going to hit .
The communication, if you recall, during COVID times happened really fast across nations and everywhere. And I think some of these companies really helped. And [00:06:00] my favorite example is Louis Vuitton. It's a perfumery and they repurposed their perfumery into a sanitizer factory very quickly, so, instead of producing perfumes, they use the same factory set up to actually come out with a lot of sanitizers.
We had an auto manufacturing company in India, also in China, where they repurposed one of their factory lines into coming up with ventilators, which was the requirement of that time. If you see, they are not the products or the offerings that is part of their DNA, or something that they even work on. Probably, it's been shut down already. I don't think the auto company is making ventilators anymore.
But I think, somewhere, their CEOs or leaders came together, globally. I'm sure they didn't have to take many layers of approvals to decide that we need to do this, because it is aligned to their value system, even though it was not necessarily aligned to the long term strategy. But, in the short term, they were quickly able to [00:07:00] rejig.
I find these examples very powerful of an organization that is very agile and of leadership that is listening to the ground and it is able to then communicate. We talk about change management as a very critical aspect of how to do organization design.
I think that is probably the need of the hour today. Because, similar events are happening, maybe not like COVID, but there are other events happening, and supply chain disruption being one of them. So, business continuity and being able to repurpose your organization's operating model so quickly to respond— I think that's where we see the difference of how success looks like in organization design.
Amy Springer: Do you have any specifics, in terms of the characteristics that you might think have existed in those organizations to enable that?
Pallavi Srivastava: Leaders of these kinds who are not risk averse. They're not risk prone, but they're not risk averse. They definitely have a certain boldness, and courage [00:08:00] of thought, and being able to act on that.
But, obviously, they would not take that if the organization structure systems were not robust enough to support that kind of a risk. After all, these organizations are meant to exist. I think the leader needs to be sensing the environment a lot more, they anticipate things a lot better.
So, therefore, much more market aligned and aware. They definitely have that sense of being able to take a bit of risk within the boundaries that it allows for. And the courage to take steps that, probably not going to be very popular and things like that. The organization also has that capability to sense and reject. Which means that, typically they are less hierarchical, more project-oriented, even though structure and a hierarchy always exists in an organization. It's more fluid, so you're not tied down to that structure that you cannot take decisions.
I think, decision making is a lot more decentralized. It goes lower in the organization, [00:09:00] rather than staying at the top. Because that's what lends speed, right? If you keep everything at the top, then speed is what gets compromised. In these organizations, we will find middle layer leaders and next to the CEO leaders, are fairly empowered, in terms of being able to come together quickly.
I think that part of the operating model— and it is, obviously, a part of the organization culture, that it is much more agile. People are encouraged to be innovative. There is psychological safety to failures. And people understand that, if we design something, or there is a risk, but there's no fear of failure to that extent.
Innovative organizations— and this is all innovation. This is all of the previous examples I gave. These were all innovations. Somebody suggested it and, they were able to quickly come together.
I think innovative organizations are the ones that are also more resilient because they're able to then quickly come up with solutions.
So, I think those would be the qualities I think we need to have organizations build as part of their DNA, if they want to [00:10:00] adapt to change quickly.
Amy Springer: So, a couple of things I've heard is, actually, our leaders going forward. They need to be really good at what's coming, what's happening in the market, sense making that. But, they also need to have incredible skills at listening down into their organization, being open minded to what the people around them are saying, and then making sense of that. Having strength around the decision they then make.
Pallavi Srivastava: Absolutely. I have a, very personal story around this. I had taken up an assignment in the U. S., and at that time, I was reporting to the SVP HR of my company.
And I remember having this conversation with him about something very operational and tactical— I was asking him some questions and he said, "Why are you asking me that? I have no idea, No, my job is not to look at the tactical and operation. If I don't have my second line, that can run the day-to-day business, then I've done a very poor job. My job is to lay the [00:11:00] pipe for the organization for the next five years. And that doesn't happen inside the organization, that happens outside. So I need to go look. I need to go meet clients. I need to see what products and offerings are coming next. I need to see what kind of skills are needed in the next five years.
I have my second line to run the transaction and day-to-day business. So he said, "Therefore, I don't know what you're asking me." And I think, that was one of my first examples of an outside-in HR leader— Everything ran seamlessly because he had a very strong layer of next gen, next layer leaders, who could pretty much run the company without him, if they wanted. And he saw his job as preparing the organization for the future, for the next five years.
And I think those are the leaders that are able to sense things quickly, anticipate and prepare the organization. But somebody does need to do that, and I think the top leaders have that job.
Amy Springer: Your example of the Louis Vuitton and your example with the car [00:12:00] manufacturer. To have the insight, though, that , "Oh hey, we've got the capability to pull off this strategic shift. So, there's has to be an element of connection within, but to the right level of detail.
Pallavi Srivastava: The Louis Vuitton is not going to be able to do a ventilator, because they don't have a setup for that. They had something that they could rejig. So, there has to be fungibility of skills and capabilities in an organization, obviously, as one of the elements, to quickly be able to work through. I'm looking at my role as a talent leader now. Fungibility of skills is the way to go forward. Which means, people need to not just be skilled in one area, but there are certain adjacent skills in and around their functions, that they need to also be skilled at. In today's time, so many jobs are getting disrupted. That should not mean that the person is also getting disrupted. They will only get disrupted if they have no other skills coming forward. So, if they are fungible in terms of skills, they can also repurpose their job roles and get aligned with what is happening.
[00:13:00] With AI coming in, so many jobs will get disrupted. And part of org design is job design. As a talent director, I think that would be one of my focus areas, is that how is the organization redesigning jobs? Skills obviously comes into the play there.
Amy Springer: Do you have some initial understanding of how that is shifting? How is job design shifting as we embrace this new paradigm?
Pallavi Srivastava: This is where I think we are nascent. So, if you pick up the research of the last five years, whether it's McKinsey or Korn Ferry or any other organizations doing surveys. Talking about the fact that they're also talking about that jobs will change, where mundane jobs and repetitive jobs or mass- transactional jobs are to go away from a people perspective. And it'll be given to AIs and chatbots and robots and things like that.
People are supposed to do more strategic, more critical thinking roles, or we'll do more creative stuff. But today, if you'd see Gen AI and artists, [00:14:00] they can emulate a Van Gogh and a Picasso and draw a painting.
That's as creative as it can get. There is a bit of a dilemma about, which jobs are actually getting replaced by the AIs and these next generation tools that are coming in. And I don't think that we have figured out what is that combination of critical thinking and strategic skills that needs to come into the jobs?
We haven't done great in that. And I think that's what talent and HR needs to figure out, going forward, is how these jobs are going to change, so that there is real value in bringing these tools in. And you have the creativity and the analytical capabilities resting with the employees of the company and not necessarily with a chat GPT. So, I think we haven't figured out that equation or the combination as yet. It's a journey. If you have insights or any research that tells us— but to me, job design, job architecture, the structures that [00:15:00] the organizations are laying down, these are all part of org design. But this is an evolving field, as of now.
Amy Springer: We've touched on the fact that strategy is changing faster, the way we come together needs to be changing faster. I haven't had many conversations where we actually dive down to that next level of, an individual and their position. How do you see that changing? How we define it?
We've come up with the structure and we've decided what Gen AI will support, but we've still got that person sitting there. How have you seen that changing?
Pallavi Srivastava: Primarily, we've been focused on the person bringing in some digital capabilities. So, between digital savvy, and understanding the different technologies, and being able to leverage, and understanding its role, especially in their products and offerings. Like, how can you bring digital in a manufacturing setup or how can you bring digital in supply chain?
I think the chat GPT and Gen AI is very new. It's pretty much last year when it exploded on the scene and [00:16:00] people had to start thinking about it. But going forward, I think we'll see more of it, but I don't think we evaluate leadership skills from those point of view. I think we're still seeing Gen AI, Chat GPT as some of the mundane jobs.
And so, it's not really a leadership skill that they need to be aware of what to do with it. I think for leadership, it is really, their focus on understanding technology and its frontiers from a sustainability point of view, from a ESG and governance point of view.
So, how do you bring these technologies in with the right spirit and with the right ethics behind it? So, I think the CEOs, leaders, we need to start evaluating on those basis. And I don't think, again, that we have a very robust model, as yet where we are assessing leaders for these capabilities.
That's probably the next step, because I don't think we are hiring leaders to see what's their views on sustainability. ESG is very popular right now. Every company is looking into it, but [00:17:00] it's still kept separate.
It's not part of the organizational strategy. It's a nice to have. Just like diversity and inclusion is a nice to have in many companies. Sometimes, doesn't form part of the DNA. Going forward, I do believe that we will need to look for leaders that are ethical in their approach to org design. And that really means is, they're incentivizing the right behaviors, so not prioritizing profit at any cost, not looking at practices that are not necessarily aligned with the right governance. So, they have to start focusing a lot more on that. And that's what is the outside-in view today.
They will have many more second-line leaders who will look at the operational aspects about what products to design and what to innovate. But, the senior-most leaders, and that's really the C-suite— they need to think more about these elements. And that's what we need to bring into our assessment and hiring models.
Amy Springer: Earlier you mentioned to help to enable [00:18:00] all of these changes into the organization, you did mention trust and safety for the people, who all of these decisions will impact. I'd love to know your experience or your observations on how leaders can help to build those elements that are needed to bring in all of these big changes we're needing to see. How are we bringing everyone along on the journey?
Pallavi Srivastava: One of my companies again, digital was like this big, big thing. And still is, by the way, it was blasting out every Powerpoint chart that we are going digital. We are digital targets at this and that and the other, and I think at a global level, very much digital was part of the strategy. And this brings us down to the very core of org design, right? It needs to align with strategy. But when it came down to it and I actually joined to bring that digital transformation from a skills point of view. What kind of people do you need to go through this transformation? The organization is going to be heavily [00:19:00] digital in the next three, four years.
What I did find was that, it was more lip service. It was more at the headquarter level, and it probably worked very well from a PPT point of view to show to stakeholders. But on the ground, at the very tactical level, we found that the incentive models were completely misaligned to what they were rewarding in the seller.
So, while the strategy said you should be selling a lot more digital, the systems behind it were not at all geared to reward them for it. And the reward between selling their traditional products and trying to sell something in digital was so huge that even the leaders did not necessarily buy into it.
From a leadership point of view, at an individual level, it is about incentivizing the right behaviors, and I think that happens from top down. So, the communication, the change management, we all have some kind of a transformation office in the organization that is [00:20:00] looking to do transformation. But I find that they are more toothless tigers. They are doing cadences. They're tracking things about what is happening, but they're not necessarily enabling it. They're not providing the resources needed. Like, I had to struggle in this example, almost six, seven months before I could even hire some digital talent to the organization.
And even though I hired, maybe, about 10 or 12 of them, in the next 12 months, I lost 8 of them. Because we bought digital talent in the organization and then they left because they said the organization actually has no focus on it. There is really nothing that we're able to do. So, there are so many losses that happened.
Reputational losses. You have your branding loss with so much of good talent. People from your competition that you had headhunted. They are taking back stories to say this company is actually not really focused on digital. So, to acquire those losses, you'll find it, it's obviously very expensive for the organization, but [00:21:00] somehow the leaders are still quite blinkered in their viewpoint, that this is the right strategy.
So, I think to my earlier point, the leaders need to really be very clear and communicating that, what is the strategy and why is the strategy making sense for the organization at this point of time? And get that buy-in from the leaders. Then, at an individual level, we need, for example, HR, to have that little voice and that empowerment to bring some of those changes. And I think, therefore, some of the support bodies, whether it's finance or HR or marketing, that would do branding, et cetera, they need to be empowered to bring some of those changes to the floor as well.
Otherwise, leaders are really— when I say leaders, the middle layer, and maybe the next higher layer— they are too focused on the operational day to focus on some of these transformational initiatives. I guess from a transformation point of view, people think more waterfall, that you start with something and then it will [00:22:00] end with something.
But, a lot of these initiatives need to run parallel. So, it can't be that we will finish "Transformation A" project first, and then B will start and C will start. So, I think that's what happens, that we tend to pick it up as a pilot and say we will only do this much. Pilots are good, but then the rest of the ecosystem needs to start aligning.
So, that means every single unit in the organization needs to come together for any such transformation. And that's where I think leadership plays a huge role. Can't be one leader holding the flag for any kind of transformational change or org design, for that matter.
It cannot just be like D&I, cannot just be an HR thing. ESG cannot just be something with corporate, the CSR unit. Similarly, cost cuts cannot only be with finance. So, it's all of them coming together and somebody has to stitch that story, which I feel the leaders are, frankly, not very equipped for it. They don't seem to have the time to bring it all together either. So, I think those are the skills that we really [00:23:00] need our leaders to build more on.
Amy Springer: Yeah. If we could click our fingers right now and give every leader one skill, what do you think would be the number one skill to help all of this happen more smoothly and better for our organizations?
Pallavi Srivastava: Firstly, one skill, he or she would not be a leader. But, I think if I were to really pick up on one skill. They need to be really resilient. I don't mean just from a physical resilience or mental resilience, whatever systems they needs to be resilient.
So, if they're bringing a technology platform that needs to be resilient to scale up to things that might happen in the future, you cannot have piecemeal implementation, let's say, of a new technology platform. If it is an operating model, it needs to be agile and resilient to be able to withstand.
So, I think the leaders who can build the capability of resilience within themselves to take whatever comes, good times and the bad times. So, that's a bit of a personal capability and a personal focus that they need to have, because things [00:24:00] are very uncertain.
And second, therefore, they need to bring about in the organization that resilience in the operating systems, the resilience in the culture, the resilience in skill sets. As I said, the more fungible you are, the more resilient you are, because you're going to be able to rejig yourself, quickly. So I think to me, that one word signifies the capabilities that an organization needs to have across.
Amy Springer: Pallavi is an associate partner at The OrgSmith, operating out of Singapore. Do you think there's anything specific to the Southeast Asian region? And the way that companies operate there?
Pallavi Srivastava: I think we're pretty global, especially Southeast Asia. When I think about Singapore, it is full of multinationals from Europe and the U. S.. And I think we carry a lot of the ethos from these multinationals into our DNA.
I think Asian leaders are a lot more empathetic to the environment and to the people. So, they tend to view the organization more empathetically, and therefore, probably are not as hugely [00:25:00] profit driven. There will always be exceptions, but especially Singapore, I feel the leaders a lot more empathetic, and caring of the environment, and of the people, and they do try to bring some of those values. But, sometimes, that can lead to not being able to take tough decisions. So, it is a bit of a balance, especially in today's time when there's so much disruption happening on a daily basis. That can be a conflict. And that's where you see some leaders succeeding and some not.
I would like to see some of the Asian leaders being able to take slightly tougher decisions, but not lose that empathy and care. I would love to see some of our global leaders come with that empathy and care a little bit more.
Amy Springer: Amazing. I absolutely agree.
Pallavi Srivastava: Alright. Thanks a lot, Amy, for inviting me.
